2013-03-25

Cyprus : Capitalism is back

After long negotiations, the EU group, IMF and Cyprus announced the deal in early hours to resolve the ongoing crisis which engulfed the tiny country for last 10 days. The financial systems were shut down, banks were locked, money was rationed, credit card payments ground to halt and all commercial activity virtually stopped.

On many counts this deal is lot better than how earlier bailouts were handled and the cost of collapse has been put on parties which should take up the cost in true capitalism instead of distributing the pain on wider tax payers. For a long time the bailouts were handled in socialist way where by the losses were spread around, to tax payers, to govt debts and to general public. Creating a skewed risk reward. Privatised gains but public losses. In the name of contagion or systemic failure, banks were bailed out with public money with minimal pain to the parties which should be first in line. The Cyprus rescue changes few things fundamentally:

2013-03-21

$ES_F : 1542-1552 : Market Recap


Bears are back in town.

Flip Flop continues. Caution required.


Finally it appears the markets are catching up with the reality in rest of the word. The Cyprus situation is escalating and I cringe just to watch it on TV. No credit cards, no electronic transactions, cash only deals, withdrawal limit on ATMs, banks closed till next week. This is not the environment for bull market highs. The bullish set-up is once again broken and market continued its flip flop move. My experience tells me that this is start of key moments for markets because such flip flop shows markets is struggling to find a direction and it usually marks a trend change. If I am reading right, move towards 1500 has started. Here is the 5 minute chart of today's day session....

$BCOIN : My experiments with Bit Coin

They say this is one currency no government can control.

What it is, how it is used and why you should care. 


The recent crisis in Cyprus where the banks have not opened for this week and there is a growing fear that "if and when" they open, there will be a bank run there is a lot of talk in blog-sphere about getting your freedom from Govt. controlled currencies and in that aspect BitCoin is one such currency which grabs your attention. I wanted to write a detailed post but thank to +Geoff Taylor's comment on my facebook post I got this excellent link for "all you want to know about bit coin". After this there is not much point in repeating what is already said and instead I created this post to note my experiments with $BCOIN - a new entrant in the forex market. 

So, as a start I got my BitCoin wallet. At the time of writing the bit coins are trading BTCUSD 73.0000

I am yet to open accounts with exchanges and may be buy my first bit coin. However if anyone is feeling generous, please feel free to make a donation to 1PAFHcY7CnuwM2KFW6DAo845XQz51gmBdN

I will keep updating the comments on this post to add more of my experience with BitCoin.

$ES_F : 1552 - 1542 : Expected Day Session Range for EMINI


Cautiously Bearish. 

Cyprus is not fully priced in I feel.


The news from Cyprus is not improving. Today ECB threatened to pull liquidity by 25th March thereby putting a firm deadline for the Cyprus to act. In return Cyprus govt postponed vote on the plan B and announced that deposit levy is not in consideration. Russia is now playing in EU politics and I would not be surprised if this results into some new conflict as well. Germany and Russia are not the best of friends after all. The Cyprus defiance is prompting Greece to rebel against the bailout terms. British savers are fretting about their savings. The banks in Cyprus have not opened for a week now. Merchants are refusing credit card payments. Cash is running short. RAF plane is in Cyprus with cash for British personnel. We have not seen such events in a long time. We can put all our trust in politicians to resolve the issues and keep buying with both hands OR we can take stock of the situation and exercise caution. May be EU will relent and renegotiate and send a bundle of cash for bail-out without demanding bail-in. May be Russia will step up to the plate and bail out an old friend in return for military and gas exploration rights. May be AAPL will buy Cyprus island with all the excess cash sitting on its books. Who knows. May be Cyprus will leave Euro all together and go in the arms of Russia. Market is paying no attention to this event so far and going up in stride. Is this a bull trap? Is this a sign of strength of the market? I do not know. All I can see is that markets are bullish and short set-up is again broken. However I am really cautious on long side today until weekend. I will keep a keen eye on news from Europe until the mess is resolved.

2013-03-20

$ES_F : 1544-1557 : Market Recap

Business as usual - grinding high.


Short set-up broken again. 


These markets are strong. Overcoming any thing thrown in its path. Breaking any short set-up before they are even fully developed. For how long. Out side the fed protected world a lot of crazy things are happening. In a tiny island the banks have not opened since 15th March and are not going to open at least until 26th March. That is nearly 10 days of bank closure.  These are not normal times. We might hide our head in sand and think a tiny island does not matter but a big dangerous game of geo political poker has been put into play and in which everyone is going to lose. The worlds is changing. I feel it in the water, I feel it in the earth, I smell it it in the air. The set-up remains bullish but my caution level are at extreme high. Today Fed came out with continuation of QE. The market reaction however seems to indicated the the high induced by FOMC promises of unlimited QE is progressively getting weaker. Here is the 5 minute chart of today's day session trading.

$ES_F : 1544 - 1557 : Expected Day Session Range for EMINI

Cyprus Fears seems to be discounted in pre-market.


However caution is required until the dust settled.


Cyprus parliament has rejected the deposit levy leaving the crisis in limbo. No one knows when their banks will open and what will happen when they do indeed open. May be EU will relent and renegotiate and send a bundle of cash for bail-out without demanding bail-in. May be Russia will step up to the plate and bail out an old friend in return for military and gas exploration rights. May be Cyprus will leave Euro all together and go in the arms of Russia. And in all these uncertainties the markets are enjoying, completely reversing the fall yesterday. Is this a bull trap? Is this a sign of strength of the market? I do not know. All I can see is that markets are bullish and short set-up is again broken. I will keep a keen eye on news from Europe until the mess is resolved. There is FOMC announcement today which is not likely to cause much unless Bernanke starts talking about reducing liquidity.

2013-03-19

$ES_F : 1544-1556 : Market Recap


Cyprus problem is not a small problem.

Short Set-Up held and markets looking weak.


The worlds is changing. I feel it in the water, I feel it in the earth, I smell it it in the air. I was suspicious of the market price action yesterday to the bad news from Cyprus and wrote this reply to a bullish tweet on twitter.  The problem which started at the tiny island of Cyprus is deteriorating. The banks are closed until Thursday 21st March 2013. They cannot open banks without passing the bail-out bill or else it will result in tremendous bank run and will collapse the banking system in Cyprus and along with that in Europe. The government is not able to pass the bail-out bill which imposes punitive raid on bank deposits. There are rumours that Finance Minister has offered to resign as if that is going to help the situation. UK is sending a plane full of cash to Cyprus to assist British personnel in case the banking system is not operational. These are the kind of news which cannot be brushed away. Coupled with the fact that we are near the resistance levels in markets, it is ripe for a decent pull-back or correction. And whatever the politicians say, grabbing bank deposits sets a very bad precedent. Once a vampire tastes blood ..... Here is the 5 minute chart of today's day session trading.

$ES_F : 1544 - 1556 : Expected Day Session Range for EMINI


Possible attempt at all time high likely.

1540 is key level for bulls to defend.


I have not been able to trade much of last week due to my other business commitments but as I can see, markets have been range bound progressively grinding higher. My chart still had 1552 - 1542 marked and I see we are still trading around there.

A few things stand out. Markets have made a new high after another new highs and grinding higher. All attempts by sellers fizzle out within 1 - 2 hours of trading and then the grind upward starts. Even bad news like Cyprus have no impact on the tone of the market and markets are making smart recovery. But I feel a lot of protection buying is going on at these levels and it is visible from the action in VIX. I am also buying protection 2 - 3 years out at 1000-800 level. A cheap insurance sort of for a calamity event.

2013-03-17

Jogging Through Historical Mottingham, Chislehurst, Petts-Wood and Bromley

Nearly 10.5 miles route via gentle hilly terrain.

World war II gun site, wood lands and parks.


IMG-20130310-WA000
To celebrate completing 125 miles (nearly – just 2 miles left – it can be called a rounding error) running since I started using Runtastic app for tracking my jogging activities, I decided to write about a new route I took this weekend. Since I started using Runtastic I have managed to use it in 3 countries. My last post about running in Hong Kong is here.

I try to do a moderately long run (6+ mile) every weekend. Well it may not be long by standards of some who run a marathon or longer but for me who started road running since July 2012, it is long enough.

What amazed me is that in our usual day to day chores we forget to witness many historically significant spots. For example I could not imagine that a place near my daughters school, just 70 years ago was a world war II gun site protecting London. The dark skies above the rolling woodlands constantly lit up by the gun fire and the silence of night broken by the the splattering sound of shots and clanking of shells falling on concrete floor below.

The weather was too cold and freezing for me to remove my gloves and take pictures from my blackberry. Instead I took mental notes and then searched internet for the links of the places I passed on this route. None of the pictures (expect the screen shot of my phone above) are mine and copyrights of the original owners are duly acknowledged.

The Route

2013-03-12

$ES_F : Market Recap

A pause in rally

Expiry weekend choppiness


I was not trading today hence it will be a short update. I was bullish at the start of the day and market did make a new bull market high at 1551.75 in overnight markets. After opening neutral, markets attempted to rally but met resistance near highs and dropped without any pause until 1543. I had overnight position for which I had set stop at overnight session low. That was closed finally at 1546.50 and now I do not have any open position. After hitting the lows of 1541.75, markets were two sided and balanced and closed near VWAP. This is the first time in many days markets have closed red and there is likely to be a follow-up tomorrow and possible test of 1539-36 support zone before it can be determined what directions market are taking for the expiry.

I flattened my stock portfolio. Added F/DFS long and BIDU/RHT/AKAM short and balancing hedge on SPY.


2013-03-11

$ES_F : 1542 - 1552 : Market Recap


Another new high - a slow certain march to all time high.

Trend remains bullish.


Market started the expiration week on front foot. The Clock change in US allowed trading to start and finish 1 hour earlier for me. Enjoyable time until end of the month. Here is 5 minute chart of today's day session.




I came in the day bullish as per this trade plan. Overnight markets were neutral. After opening slightly down on low volume markets immediately dropped to expected support zone and breached it by a tick, giving only one fill (first green arrow). The reaction was strong and hence I did not cover at gap fill. Market continued to keep the pattern of higher highs and higher lows and soon created new bull market high. It seemed to stall there for a while and decided to take profit at 1547 (second red arrow). In hindsight it was early. The comments section of the trade plan describes the trades.

$ES_F : 1542-1552 : Expected Day Session Range for EMINI

Possible attempt at all time high likely.


1535 key support level to watch.


Hope my friends in US are enjoying the clock change and not finding it all confusing. Markets still retain that bullish stance and with no news expected today, I would expect markets to play by the same hymn sheet and grind higher. This week is options expiry week so may be the touch to all time high is likely to happen by Wednesday/Thursday.

Today again I would expect to find support at 1542-39 area and resistance in 1551-53 area. I would be looking to see the reaction in the trading range before taking a trade. Market is looking to end on a bullish note.

In my hypothetical stock portfolio I will be reviewing various stocks from weekly close basis.

The trend is still bullish and calling tops is futile. However please have a look at this post from longer term perspective which is keeping me cautious at these levels. 

2013-03-08

$ES_F : 1541 - 1551 : Market Recap

Employment numbers surprise on the upside.


New high for current bull market. Trend remains bullish.


After a consolidation day yesterday, today was bit different and saw nice two way energy and confirmed the bullish set-up once again. Here is 5 minute chart of today's day session.



I came in the day bullish as per this trade plan. Overnight the markets were bullish and looking to open strong after employment numbers surprised on the positive side.  After opening strongly gap up on good volume, however the market mood changed immediately after first 5 minute of trade and market quickly dropped into expected 1541-1538 support zone and further down. This move down was sharp and sudden and without any rally in between so it seemed like (without the benefit of hindsight) that it could very well be rejection of the day session high. I was filled on all my levels shown by green arrows.With that set-up I came in the "alert" mode and was looking to exit most of my positions near the day session mid and a move to VWAP. I got the first opportunity when the markets traded near the day session mid (fifth red arrow) and I exiting 75% of my position leaving the stops on rest on day session low. At this time a minor short set-up was also in play. However after hesitating a little near the day session mid point and VWAP shown by grey oval, markets broke higher and the minor short set-up was rejected. This allowed me to move stops to my remaining position to break even. Since I bought the position near the day session low, I am planning to keep it overnight with break even stops and manage it as a swing trade. Markets continued to grind higher rest of the day on low volumes and appear to be closing near highs. The comments section of the trade plan describes the trades.

$ES_F : 1541-1551 : Expected Day Session Range for EMINI


June Future is front month today.

Unemployment numbers give new boost to the bulls.


I will be referring to June future from today which became front month yesterday and volumes rolled to that contract. I also had to go for an event last night so there was no market recap but my trades are commented in the trade plan or in the HomeWork page. Unemployment numbers were a positive surprise for the markets and promptly crushed Gold and lifted stocks. I would expect this to be the theme of the day.

Today I would expect to find support at 1541-38 area and resistance in 1549-51 area. I would be looking to see the reaction in the trading range before taking a trade. Market is looking to end on a bullish note.

In my hypothetical stock portfolio I will be reviewing various stocks from weekly close basis (that would be weekend work) and to balance the short position with some new longs at good levels. Recently I added MSFT and TOL and would look to complete those positions if possible.

The trend is still bullish and calling tops is futile. However please have a look at this post from longer term perspective which is keeping me cautious at these levels. 


2013-03-07

$HG_F : Wireless Recovery Without Copper

Dr Copper coiling up in tight range while stocks surge. May be we are all wireless now :-)

Sign of potential disconnect between markets. Time for caution for any bulls going all in on these highs.


I am sure every one is basking in the glory of headlines about stock markets hitting their all time highs (Bah Humbug). The bull market of 2009 is incredible in that regard. It has crushed the bears, many top callers have been obliterated and the markets have come in the complete control of central bankers planning bailouts and engaged in money printing. It is quite likely that in such party, the sentiments can get carried away. After all, who has not heard the famous last words - just one for the road!

Even though I trade technically and what is in the charts, I like to keep an keen eye on fundamentals, eventually fundamentals do come out in charts. One such indicator of economic activity is Copper. If the growth is coming from economic activities, copper is one element which is used in abundance. Any real economic activity (bank bailouts are not real economic activity in case some one has doubts) ends up using copper. So demand and therefore price for copper can be a good indicator of what is happening in real world. In fact for that reason many market participants call it Dr Copper. Here is a 5 year weekly chart of Copper continuous futures compared to SPX (as magenta line).

$ES_F : 1530 - 1542 : Expected Day Session Range for EMINI

Forget bulls and bear. What has gone wrong with lions?

Cautiously Bearish today.

What is wrong with the lions and why are they coming after women? Recently one has managed to spoil the climax for a couple and other has managed to devour an intern. In other news, ECB and BOE left the rates unchanged and BOJ did not do more than what they are already doing. China made some noises on currency wars and dumping the garbage in the neighbours yard with wink and nudges directed at Japan. Markets are looking bit balanced today and may trade in a range and choppy before taking next move. Current tight range of 1536-1544 seems to be holding up the energy of the up move. I have a feeling we can see a peek below this range today to shake out some recent bulls. 

Today I would expect to find support at 1533-30 area and resistance in 1541-1542 area. I would be looking to see the reaction in the trading range before taking a trade. Overall I expect today to be a day of consolidation. May be I will look at various other markets or look for longer term swing opportunities. I will update the comments section as and when a trade set-up is holding.

In my hypothetical stock portfolio I am looking to balance the short position with some new longs at good levels. Recently I added MSFT and TOL and would look to complete those positions if possible.

The riding trend is still bullish and days like yesterday or today are simply consolidation in the a major trend. There is no good short set-up in play so far.



2013-03-06

$ES_F : 1539-1551 : Market Recap


Consolidation day with bullish bias.

Another new high for bull market.


Today was a day of consolidation with markets maintaining their bullish bias. Here is 5 minute chart of today's day session.



I came in the day bullish as per this trade plan. Overnight the markets were bullish and looking to open strong. After opening strongly gap up on good volume, the initial move to gap fill was rejected and I went long at 1543 (first green arrow) thinking that my entries will not be filled. Market proceeded to make a new high but immediately started giving up the gains. I took my second long at 1540.25 (second green arrow) after market missed my support zone of 1439 by 1 tick and I got my final fill at 1438 third green arrow. Market started its slow grind up after this point after hesitating near VWAP for a short while it shot up to close to day session high. I exited my bulk of position at 1544 forth red arrow and the final position at 1439.5 fifth red arrow after markets failed to close near highs. The comments section of the trade plan describe those trades.  Today was a balanced day overall.

$ES_F : 1539-1551 : Expected Day Session Range for EMINI

All time highs are in fashion. SPX heading to its own All Time High


Bulls in control of the market.


Markets have got some new bulls because all headlines are pointing to "Stocks Are King". The trend is firmly bullish but there are ample signs of caution. Markets have been on bullish front foot after DowJones hit its all time high however it is a bit of Bah, Humbug. Death of Hugo Chavez is also a non event for the markets. Who needs to mourn a socialist when DowJones is on all time high however the speed with which Telegraph came out with this obituary it seems they had been writing it whole day waiting for the "publish" button.

Today I would expect 1539-1536 as area of support leading to a move up to 1546-1550.

In my hypothetical stock portfolio I am looking to balance the short position with some new longs at good levels.

2013-03-05

$ES_F : 1527-1538 : Market Recap

DowJones on All Time High. Russell already enjoying. S&P to follow shortly.


Another high, bulls in charge.


DowJones looks to be closing above its All Time High. Every one is excited about that. S&P500 is not far behind and just 33 points below its all time high. After a long time, people have started talking stocks once again. All this reminds me of 2007. The markets are floating on artificial props and with one catalyst the house of cards can start tumbling down. But so far there is no such catalyst in sight and so it seems the trend will continue.The bull market which started in 2009 is powering ahead in full swing. Market has decidedly broken out of the range it was trading before I left for my travel last week. Here is 5 minute chart of today's day session.



I came in the day bullish as per this trade plan. Overnight the markets were very bullish and looking to open strong. After opening strongly gap up on good volume, market immediately went to trade at my expected day session high at 1538. It was getting clear that markets will trade higher than that. I went a probe long first green arrow (small position to test the market with tight stops) and I could manage to exit it new session high was printed shown by second red arrow. I am still getting back into my trading routine so I did not trade much and instead was looking charts and reading twitter and facebook. Markets eventually proceeded to make new high at 1542.75 indicating a strongly bullish market.

$ES_F : 1527-1538 : Expected Day Session Range for EMINI


More pain for bears. $DJI is likely to hit its all time high today.

Bulls in control of the market.


When I was leaving on my travels last week it was looking as if bears are showing their claws again but the joy did not last for more than couple of sessions. The markets have come back to hunt for up-side and crushing any shorts which may exist in its way. Russell 2000 has made all time high, DowJones is going to make it today it seems. The news papers would be full of this in coming days. SPX is not far behind and very likely it will make new highs as well before this tide turns.

I would expect 1527 area as support today leading to a move up to 1538-1540. I am still getting back in the routine of trading after my travel so this is a short post.


In my hypothetical stock portfolio I am looking to cover 50% of AAPL short and move stop to break even.